DMN & Tipalti Reveal Solutions to Music Industry's Black Box: Tackling Unclaimed Royalties and Streaming Fraud
The music industry faces a significant challenge with unclaimed royalties and fraudulent streams, collectively known as the 'black box' problem. This multi-billion dollar issue stems from three main sources: bad metadata, unclaimed works, and deliberate fraud.
Bad metadata and missing information prevent proper royalty distribution to rights holders. As the industry grows with more platforms and creators, this problem continues to expand, leading to substantial undistributed royalties.
Fraudulent activities compound these issues when bad actors intentionally input incorrect information or use bot farms to generate fake streams, diverting funds from legitimate recipients.
Hand burning dollar bills
Key Solutions to Address These Challenges:
- Strong Participant Verification
- Implement robust Know Your Customer (KYC) processes
- Use validated security protocols
- Verify user identity before platform access
- Strict Metadata Requirements
- Mandate detailed ownership information
- Require complete split documentation
- Include publishing IP ownership details
- Collect accurate remittance and tax information
- Clear Holding and Redistribution Policies
- Establish specific timeframes for holding unclaimed funds
- Create transparent redistribution protocols
- Follow established models like YouTube's system
- Robust Dispute Management
- Freeze payments during disputes
- Maintain dedicated resolution teams
- Ensure fair adjudication processes
These preventive measures can significantly reduce unclaimed royalties and fraud while ensuring proper compensation for rights holders and creators. Regular audits and updates to these systems help maintain their effectiveness as the industry evolves.
US Copyright Office building exterior
Photo Credit: JP Valery
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